Shutdown may disrupt DoD contractor pay, official says

Sep. 30, 2013 - 02:57PM
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A government shutdown could potentially disrupt or delay payments to contractors and some will not be paid at all, according to a Sept. 26 letter from a top DoD official.

Frank Kendall, undersecretary of defense for acquisition, technology and logistics, said in a letter to trade groups that contractors performing work on contracts made in fiscal 2013 or before will “generally” be paid, but that only fiscal 2014 contracts for “excepted” activities will be paid during a shutdown.

“There may, however, be delays or disruptions in payments because of the effects of shutdown on government employees who process payments,” he said.

Excepted activities include those needed to support military operations or address emergency circumstances, he added. Other contractors will have to wait.

“Payment for work performed under these contracts cannot be made until the funds are actually appropriated and may be delayed,” Kendall said.

He said while the administration “strongly believes” there should not be a shutdown, it has to prepare for the possibility.